Email this article to a friend

A trader at Schroders and four other people were arrested on Tuesday as part of a new investigation by the Financial Services Authority into suspected insider dealing, in the regulator's latest effort to crack down on market abuse.

A person familiar with the matter said the Schroders trader is suspected of using a personal account in relation to the alleged wrongdoing. Schroders confirmed the arrest and said the employee has been suspended.

The FSA said four search warrants were carried out early Tuesday, in the City of London, Lincolnshire, Leicestershire and North Yorkshire, the FSA said. It said the five people involved are two men, aged 37 and 62, and three women, aged 39, 51 and 63. All are now in custody to be questioned Tuesday by police "in connection with an investigation into insider dealing and market abuse".

"The FSA has informed us that the allegations relate entirely to this individual's personal actions," a Schroders spokeswoman said. She said the firm isn't subject to any investigation and that there is no indication the alleged actions affected clients.

The company is one of the UK's oldest fund managers, with roots stretching back more than 200 years. It manages £202.8bn ($321bn) for institutions and retail investors and runs a private bank.

A person familiar with the matter said the Schroders employee is an FSA approved person, meaning that they have been approved by the regulator to perform controlled functions at an authorised firm, such as advising on client deals or managing investments.

The FSA has brought a series of high-profile insider dealing cases in the past few years, securing 21 convictions since 2009. In the most recent conviction, Thomas Ammann, a former investment banker at Mizuho International, in December was sentenced to two years and eight months in prison after admitting to sharing inside information with two women and profiting from their trades. Mizuho wasn't implicated.